Sim, Live and Funded: What Each Futures Account Type Is For

Futures traders usually pass through three kinds of accounts: simulation, a live account funded with their own money, and a funded or evaluation account from a prop firm. People often treat these as levels in a game. It's more useful to ask what question each one can answer, because none of them answers everything.

Simulation: test the process, not the profit

A simulated account trades live market data with no money at risk. It's good for learning the platform, practicing order entry, testing whether you can follow a written plan, and finding rule violations before they cost anything. In NinjaTrader, simulated trading and the Playback connection are separate things: a SIM account trades against live data, while Playback replays recorded data and you select the account and connection yourself. Check the NinjaTrader 8 help guide at ninjatrader.com/support/helpguides/nt8 for current steps.

What sim can't tell you: it doesn't reproduce queue position or slippage, so a simulated fill is not a validated exchange fill. It also doesn't reproduce the feeling of watching real money move, so passing in sim says little about how you'll act live.

I like a documented sample before going live, such as 100 trades with every trade logged. That number is a working minimum to find process errors, not statistical proof. Even 100 trades can't distinguish a real edge from luck unless the results are extremely lopsided, and 30 or 50 trades prove far less. What the sample can show is whether you follow your rules, how large your worst day was, and whether your fills in sim were realistic. Compute expectancy as average win times win frequency minus average loss times loss frequency, include commissions, and treat the answer as an estimate with wide error bars.

Sim goes wrong when it becomes permanent. If you're never planning to put money behind it, you're collecting practice, not evidence.

Live personal account: test execution under real cost

A small live account tests what sim can't: how you behave when losses are real. Size is the lever you control. Hypothetical example: with a $20,000 account and a rule of risking 1% per trade, your risk budget is $200. A 4-point stop on MES is $20 per contract at $5 per point, so you could size up to 10 MES. The same stop on ES is $200 per contract at $50 per point, so one ES contract uses the entire budget. Margin is collateral your broker holds, not the most you can lose, and stops can slip, so the real loss can be larger.

The percentage you choose is a personal decision about risk tolerance. Starting smaller than your maximum while you compare live behavior to your sim records is a reasonable approach. Expect live results to differ from sim and keep records so you can tell whether the difference is fills, hesitation or rule breaks.

Funded and evaluation accounts: a different product

A funded account from a prop firm is a service with rules, not a bigger version of your own account. Typical cost components include the evaluation fee, reset fees, data and platform fees, and any activation or monthly fees. Then come the rules: drawdown limits and how they're measured, profit targets, minimum trading days, allowed products and sessions, contract limits, payout conditions and profit splits. These vary by firm and sometimes by product and account vintage, so read the firm's current documents for the exact account you're buying.

Some things people assume that aren't safe to assume:

• A funded account isn't a live-money account. Depending on the firm, you may be trading simulated conditions with payouts governed by contract terms.
• Payouts aren't guaranteed, and the evaluation fee doesn't cap all your downside, since resets and repeated attempts add up.
• A drawdown limit that has been used doesn't recover on its own. Read how it's calculated, including whether it trails open profit.
• Rules on automation vary and some firms prohibit it. Check the current terms before using any tool beyond manual order entry.

Tax treatment is also a question for a qualified professional. Payouts from a prop firm may be treated as service or contract income and aren't automatically gains on futures. For regulated futures contracts held in your own account, see IRS About Form 6781 and Topic 429, and don't assume the same treatment applies to a firm payout.

How to compare firms

1. Download the current rules for the exact account type you're considering and read the drawdown definition.
2. Add up the total cost of one realistic path: evaluation, an expected number of resets, and monthly fees.
3. Check which markets, sessions and platforms are allowed.
4. Read the payout section and any withdrawal conditions.
5. Run your own average trade through the drawdown rule to see how many losing trades it takes to breach it.

Choosing where to be

If you can't follow your plan on a logged sim sample, a live account or an evaluation will only make that more expensive. If you can follow it, a funded evaluation is a cost-benefit decision about fees and rules versus the account size you get access to, and your own record should drive that decision. Bigger account size doesn't fix execution problems. It makes them larger in dollars.